Final Action on Rules
The Commissioner of Insurance, at a public hearing under Docket Number
2426 held at 9:00 a.m., November 23, 1999 in Room 100 of the William P. Hobby
Jr. State Office Building, 333 Guadalupe Street in Austin, Texas, adopted
amendments proposed by Staff to the Texas Automobile Rules and Rating Manual
(the Manual), Rule 74, including Section E.3., drug and alcohol driving awareness
training credits, and also Rules 77 and 79. The amendments' purpose is to
implement the provisions of the Insurance Code, Article 5.03-4, adopted by
the 76th Legislature in House Bill 3757. Staff's petition (Reference Number
A-1099-17-I) was published in the October 22, 1999 issue of the
Texas Register
(24 TexReg 9315).
Three portions of Manual Rule 74, Private Passenger Auto Classifications,
will be amended. Directly following the rule's caption, the following words
will be deleted: "Applicable to Liability and Collision Insurance." This deletion
is needed because some portions of the rule (both current and revised) also
apply to Medical Payments and Personal Injury Protection coverage. The parenthetical
phrase directly following the above deletion will be amended to read as follows,
"(Unless otherwise specified, this rule does not apply to risks rated in accordance
with the miscellaneous types rule.)" (Emphasis is used only to show additional
language.) This additional wording is needed because Section E.3. will apply
to miscellaneous type vehicles.
The paragraph following the caption of Rule 74.E., driver credits, currently
reads, "This rule does not apply to an auto that is subject to experience
rating or is a miscellaneous type vehicle." The following sentence will be
added to that paragraph: "However, Subsection 3, drug and alcohol driving
awareness training credits, applies to a miscellaneous type vehicle."
Rule 74.E.3. will be amended in several ways, as mandated by statute, but
some of the current wording of Section E.3. is to be retained, such as the
amount of the credit (5%). Section E.3.a. is amended to delete references
to the Texas A&M University, Safety Education Program and to restrict
the credit to persons who complete programs that are regulated and approved
by the Texas Education Agency (TEA) under the Texas Driver and Traffic Safety
Education Act, Texas Civil Statutes, Article 4413(29c). Section E.3. a. is
further amended to add the language "and the principal operator is in compliance
with paragraphs c. and d. of this subsection." In response to testimony at
the public hearing and comments received during the 30 day comment period,
Section E.3.c., concerning the duration of the credit, has been changed from
the language that was originally proposed in Staff's petition. The Department
received several comments and several witnesses testified concerning the belief
that the duration of the application of the credit should be limited to a
36 month time period. The commenters cited several reasons for this 36 month
limitation which are as follows: (1) it is sound public policy to require
drivers to periodically retake the course in order to review the course material
and to apprise drivers of changes in the law, (2) prior to the enactment of
Article 5.03-4, the rule set 36 months as the duration of the time period
for application of the credit and (3) a 36 month time period is consistent
with the other automobile credits in the auto manual. Staff agrees and the
proposed language has been deleted and the language of the current section
E.3.c. has been essentially retained. With these changes that have been made
in response to comments, the current duration of three years for the 5% credit
is to be retained.
A second change to section E.3.c. was made in response to a comment suggesting
the substitution of the language "an operator" for "any person" because "any
person" is overly broad. Staff agrees that a change should be made to narrow
this language but chose the language "customary operator" because "customary
operators" of the auto will be ascertained by the insurers when they determine
eligibility for the credit. One further change to section E.3.c. is that the
language "Subject to the provisions of paragraph d." has been added to the
beginning of the paragraph. This change is necessary to clarify that if a
customary operator is convicted of DWI or a similar offense, then any person
under the policy (unless the convicted person is excluded from the policy)
will be ineligible for the credit for seven years from the conviction date.
A statutory exception applies to this ineligibility provision if the convicted
operator takes a course within three years of expiration of the seven year
period mentioned above. In that case, the operator can begin receiving the
credit upon expiration of the seven year period, and the credit will continue
until the remaining portion of the three years has expired. For example, if
a customary operator takes the course five years after the date of conviction,
then he or she will receive the credit for one year, beginning two years from
the date of completion of the course.
In response to testimony at the public hearing and comments received during
the 30 day comment period, section E.3.f., concerning the application of the
credit to policies that are effective before or after January 1, 2000, has
been changed from the language that was originally proposed in Staff's petition.
The Department received several comments and several witnesses testified concerning
the belief that it would be unfair to persons who completed the drug and alcohol
driving awareness course prior to January 1, 2000 not to allow the credit
to be applied to policies that are effective on or after January 1, 2000 because
the course that was taken was not the course approved by the Texas Education
Agency (TEA). The commenters expressed the belief that persons who have taken
the drug and alcohol driving awareness course prior to January 1, 2000 should
receive the policy credit for the full balance of the 36 months. The commenters'
reason for believing that the credit should be continued for non-TEA approved
courses taken prior to January 1, 2000 is that the TEA drug and alcohol driving
awareness program is based entirely on the structure and content of the current
drug and alcohol awareness program operated through Texas A&M University
and that the education received by drivers who took the non-TEA approved course
before January 1, 2000 is equal in content and quality to the education received
by drivers taking the TEA approved course after January 1, 2000. The commenters
also stated that the intent of the new law is to allow persons taking an approved
course prior to January 1, 2000 to continue to receive the policy credit for
a full 36 months. Staff agrees and has amended section E.3.f. to provide that
a policy receiving the credit under rule 74.E.3., as it existed immediately
prior to January 1, 2000, may continue to receive the credit subject to the
provisions of the rule.
Rule 77, Miscellaneous Type Vehicles, and Rule 79, Motorcycle Operator
Credits, will be amended so as to make it more obvious that revised Rule 74.E.3.
will apply to miscellaneous type vehicles (which include motorcycles, motor
scooters, etc.). The amendment to Rule 77 will consist of adding a second
paragraph under the rule's caption, which new paragraph will read as follows:
"Rule 74.E.3., drug and alcohol driving awareness training credits, applies
to a miscellaneous type vehicle." The amendment to Rule 79 will consist of
adding a first paragraph following the explanatory note that follows the rule's
caption, which new paragraph will read as follows: "Rule 74.E.3., drug and
alcohol driving awareness training credits, applies to motorcycles or similar
vehicles described in this rule."
The amendments as adopted by the Commissioner of Insurance are shown in
exhibits on file with the Chief Clerk under Reference Number A-1099-17-I,
which are incorporated by reference into Commissioner's Order Number 00-0085.
The Commissioner of Insurance has jurisdiction over this matter pursuant
to the Insurance Code, Articles 5.03-4, 5.10, 5.96, 5.98, and 5.101.
This notification is made pursuant to the Insurance Code, Article 5.96,
which exempts it from the requirements of the Government Code, Chapter 2001
(Administrative Procedure Act).
Consistent with the Insurance Code, Article 5.96(h), the Department will
notify all insurers writing automobile insurance of this adoption by letter
summarizing the Commissioner's action.
TRD-200001388
Lynda Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Filed: February 23, 2000